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tv   Your Bottom Line  CNN  November 28, 2009 9:30am-10:00am EST

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thing, one a ay? >> that's lloa lot. >> that's a great question. at the start of the symptoms so you would have the first day you don't feel good you have the soup and a full red pepper because it has 291% of the recommended daily allowance of vitamin c so you would just cut it up over a green salad, put a little salt and pepper on it and you're good and microwave baked potato. >> doctor, thank you so much. >> you're welcome. >> thank you so much for that, some food and news you could use this morning. brianna and i will be back at the top of the hour with more live news. we hand it over to gerri willis and "your bottom line." hello i'm gerri willis and this say special edition of "your bottom line" the show that saves you money on this thanksgiving weekend. we're looking back at 2009 and your personal finances from your house to your job, your savings and your debt, was there anything to be thankful for and what do you have to look forward to in 2010? the show that saves you money starts right now.
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so let's begin with your bank account it's no surprise that the economy is squeezing many of you, our budgets are under pressure, saving money is a dream for many people, so let's get straight to the solutions. ryan mack is the president of optimum capital management, dannie babb author of "the accidental landlord" and lynnetticae khalfani-cox and do rosatoo, welcome to the thanksgiving table. >> thanks, gerri, great to be here. >> this whole idea of savings and debt is so important. ryan, savings rates haveriesen in september something like 3.3%. but is this sustainable or are people doing this because they feel like they have to? >> if there's any time that fear was a good thing it's been over the past year or so, when we've seen the economy pull back from the brink of one of the hardest economies since the 1930s, so now individuals are understanding the power of
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saving, the power what have we need to do with each individual dollar. there's three things you can do with money, you can spend it, invest it or you can give it. we have to understand the power of saving it so we can start to do the other things more fruitful things outside of material wealth putting value on things that have no value. >> dannie we got used to spending rather than saving a lot of people would feel that way and this year we're seeing that people are saying when it comes to spending for the holidays i'm going to pay in cash. >> pay in cash and debit card for the first time in history, debit card use is going to increase credit card use over the holiday season which really says a lot about where the american consumers' head is and how concerned they are about going further in debt. >> debt, debt, debt. i think so many people are thinking what do i do about this, and of course the biggest tool people use for debt is their credit card typically. >> correct. >> what is your advice to people out there in. >> dannie touched upon one thing this holiday season you want to use cash more than the credit cards or debit card to access
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your checking account or savings account but even if you're going to use those credit cards you better check a couple of things before you hit the malls. >> like what? >> your credit limit it might have been slashed, your interest rate and the account status because a lot of banks closed off accounts and haven't notified people that the accounts are closed and you don't want to be embarrassed with a cart full of stuff trying to shop out there. >> that's a great idea. i want people to hear something about from elizabeth warren, you know elizabeth warren, what she had to say about credit cards and some of the things you're pointing out. >> the consumer credit market is broken. there's just no other way to describe it. we now receive credit card agreements that are 30, 32 pages long, and they're filled with incomprehensible text. that means that i can't look at credit card a, credit card b and credit card c and tell the difference between them, tell which one i really want, tell which one has the highest risk or lowest risk. >> so it's been so frustrating
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for so many people out there, because you felt like the rules were changing all the time. especially this year, as the limits were reduced and interest rates were raised. donna, what would you say to people out there who are trying to figure out what are the new ground rules, how is it going to change with this new cards act? >> a lot has changed already as lynnette said that people are seeing ahead of the new card rules taking effect in february, people are seeing their interest rates rise on their credit cards and their credit limits cut and sometimes cards are being shut down but the good news something to look forward to that you're going to be in 2010 you're going to have less onerous rules on your credit cards. that's a good thing for people. i don't think credit card debt say positive thing. you've seen interest rates climb the average interest rate is 14%. a year ago it was 11%. this is not debt you want to have. you'll be treated more fairly with a credit card in 2010 but this is not the debt you want to have. >> absolutely not. ryan, what is there to look forward to?
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people have more savings, that's good to be a good thing, right? >> it is a good thing. the gdp is going to rise slower than it had in the past but i don't think that the sugar high of the gdp rush that we saw in the 6% and 7% rise. >> the sugar high love that. >> it wasn't sustainable. now we get back to the basics of putting money away, saving for a rainy day, and talking about the credit cards, the credit card companies are going to be earning projected about $39.5 billion off of overdraft fees so simple things of budgeting and making sure if we have $20 in our account let's not spend $30 and give them the $35 fee we have to pay to them. >> amen to that. lynnette, what ryan is saying is so important. when people do pay down their debt and i know that you personally had a lot of debt at one point and paid it off. >> right. >> how does that make you feel going forward? >> it's liberating, tremendously gratifying. you really feel enslaved by the debt. you feel there's so much that i can't do because i'm in bondage with the debt.
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>> it's weight on your shoulders. >> absolutely, i can't save for my future or my kids' college education. i can't pursue business opportunities that i might like to have and frankly i'm stressed out about it. nobody likes the thought of living paycheck to paycheck or perhaps arguing with their spouse about money, et cetera. i think ryan touched upon a great point the back to basics movement across america is a very, very good thing. i expect that the savings rate is going to stay marketedly higher than it was a couple of years ago when it was negative 2%. we've had to wean ourselves from credit and that's good for the american economy and for the global economy going forward. >> lynnette, great thoughts. great thoughts, everybody. stay put. we're just getting started. unemployment is over 10%. how safe is your job now and going forward? we'll tackle your number one investment, your home. express each one more with downy simple pleasures feel more calm
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it pays to discover. sings the beginning of the recession back in december, 2007, the unemployment rate has
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gone from 47 9% all the way past the double-digit mark. the unemployment rate jumped to 10.2% in october, the highest since 1983 and with these numbers this startling, when will we see a recovery on the jobs front? donna, i want to turn to you. 7.3 million americans unemployed since the beginning of the recession. where are the jobs we've been promised? >> we've lost more than 7 million jobs that unemployment rate is at the highest in more than almost three decades so where are the jobs? the bad news is that the unemployment rate continues to go higher but there have been some bright spots even in the worst of the downturn. >> what are the bright spots? >> health care continues to be higher. the unemployment rate within health care and education together it's less than 5% compared to 10% for the overall economy. >> so that's different. >> it is very different and for folks who have a college degree as well it's about half the overall unemployment rate so folks are in some growing industries and who have been adding to their skills and have
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education, have felt a little bit less of the pain, but no doubt in 2010, the unemployment rate is going to remain high and we all need to keep adding to our skills. >> so i know that when you talk about unemployment, the people have been really affected, there are a lot of boomers affected, older people in the workforce that have been affected and some of the folks haven't interviewed in decades. what is your advice, lynnette? >> to anybody out there who has to start over if they've gotten a pink slip you definite way want to bone up on your skill sets your communication skills, technical skills your managerial skills, your writing skills and so forth. you want to polish up that resume, get any career counseling or advice you can get, but i think one thing to highlight just to follow on what donna was talking about some of the good news, there are industries that are hiring like health care and education, government sectors >> government is a big source of jobs. >> they're hiring, right. to the average person who is job hunting it doesn't feel that way for two important reasons.
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one is that one out of three of the 15 million unemployed americans right now have been out of a job for six months or longer, so we're talking about chronic unemployment and that hurts when you think about the average family needing the paycheck every two weeks the thought of going six months or more without a steady earned income is daunting. the other factor if i say this quickly, for every one full time job that's available, there are six workers vying for that job. so it's competitive. >> let's get dani in here. she's been think being small business and small business hiring. >> yeah. >> this is the engine of the american economy. when are they going to start really hiring in earnest? >> it is. what happens, what is happening now 30% of the american workforce is employed by 100 employees or fewer. small businesses are afraid to death of taxes and not hiring. we do know that employment lags behind the economy substantially up to a couple of years. back in 1983 an 8% growth rate
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in the economy but we only dropped unemployment by 2.5% so it's going to be some time before we see these jobs return back to the market. where we're seeing growth is exactly what's been talked about already, health care, green jobs is another area, and higher education if you have a masters degree this may be the time to get a part-time teaching job while waiting for your full time job. >> part-time teaching job. ryan give me some hope here. >> i think that people get it. i'm from detroit and the community colleges are being overflowed with individuals trying to get additional training, additional services saying i need to get recertified and additional licenses. this is a direction we need to go, find out what your skills are, what your talents are, what your passion is, what are you good at. you might have been in automotive industry working on the line. you might want to see if you can become a nurse's assistant. >> that brings up a good question. do you think people will start moving for jobs? that's happened in the past people leave areas like detroit where unemployment is so awful. do you think we can start seeing really some displacement of workers to different parts of the country? >> i think individuals are going
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to start thinking outside the box. if that's changing locations f that's changing careers, if that's changing countries we have to understand that this is what it's ball. we have to figure out what you need to do to get dollars in your pocket, food on your table thinking aggressively and think optimistically, things are going to start turning your way. >> for the people who are unemployed to give them a little bit of hope, i always talk to meem and dani is a big advocate, she and i are both entrepreneurs and ryan as well. sometimes it's easier to land a client than it is to land a job. people who have certainly special skill sets think about consulting, think about turning a hobby into cash. pursuing a little bit of that entrepreneurial ambition and go to-itiveness that defined a lot of the american ethos here. don't think that your fortune is completely tied to corporate america. think about pursuing a small business opportunity. >> it's sort of the rise of freelance nation and i think it's a positive thing.
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it kind of puts you more in control of your career and i think especially if health care reform gets fixed it's going to be easier to pursue those opportunities. >> great conversation. still ahead your house and your still ahead your house and your health care, lot this year and there are even more changes in store for next year. stay with us. (music volume decreases) well, ups can help lower warehouse costs, (music volume increases) while increasing your global reach. (volume increases, decreases) more ups technology can help bring down paperwork. (music volume increases) and ups has more shipping options than anyone. hey, it's time to seize the opportunities with ups. (backbeat swells) there, now that sounds perfect. that rides a skateboard and does flips off a mountain... mom: thanks to walmart, i can give them a christmas as big as their imaginations. son: ...d a remote control airplane that can fly into outerspace... even if my budget isn't. son: ...and a robot that makes cotton candy...
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still with us this half hour and they're not going anywhere, ryan mack, dani babb, lynnette khalfani-cox and donna rosatto. foreclosure declines, is st a possible indication the foreclosure tide is turning? back in february i spoke to sean donovan. here's what he had to say. >> the key effort at limiting foreclosures will be using a significant amount, tens of billions of dollars of t.a.r.p. money to be able to accelerate dramatically modifications of mortgages, and what we are working on is a plan to create a set of incentives, assistance to do that, while at the same time making sure that we have the tools that will ensure that lenders do it.
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through a range of options. >> so that was sean donovan and dani babb, making home affordable not getting a lot of traction here. >> no. >> what do you she? the marketplace? you're at the ground level. >> what i'm seeing is banks completely unwilling to make a modification for a homeowner unless they're going to get government money to do it. 30% of the homeowners out there that need it will actually get it. two-thirds of the u.s. population owns a home right now. one-quarter of the u.s. homes actually have negative equity. these people will be in foreclosure at some point. we haven't begun to see the jumbo market fail. >> it's going to get worse? >> i'm saying the housing market will get worse. we have to remember that four states make up 50% of the foreclosure rate so it's not widespread. it is specific to certain areas. >> ryan, i want to turn to you. i know you think that what's going on with the government and the spending going on there is really kind of propping up the numbers and making it look better than it otherwise would. >> stimulus has definitely helped but especially when it comes to the home tax credit we
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have to urge individuals don't buy a home just because you get a tax credit. we have to get back to the basics. do you have your fico score higher, a regular budget and house budget, how much can you really budget but a house budget, how much can you afford? the tax credit should be like the cherry on top of the banana split, not the banana split itself, an additional incentive, i can afford to buy a home and get an additional $8,000 to subsidize payments. >> you talk about how the numbers are misleading and the shadow inventories out there. do we have a long road to go in this market? >> we still do. i have to say, we'll probably have more foreclosures -- 2.4 million are projengted in 2010 versus 2 million this year. it will get worse before it gets better, but it is somewhat geographic. the good news is we're seeing some stabilization in the housing market, and if you are a home buyer, this is the good news, you know, with the tax
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credit. as ryan said, you want to have all your ducks in a row before you use that, but if you are a home buyer in the market, that is what's stimulating some of the economies helping stabilize some of these things. >> it's not just the people who want to buy but the people who already own who are in deep trouble. >> correct. >> lynette, what would you say? >> like ryan said, don't bite off more than you can schu. the $8,000 tax credit for first time home buyers is one incentive. it's moving the needle for stimulating purchases more, but the first-time home buyer, they're eligible through april of 2010 for a $6,500 tax credit. but nobody i know who's going to buy a second home is going to do so just for $6,500. >> but my question is, what are people who are in homes right now and they've seen the value of their home fall? what would be your words of wisdom for them? people are thinking, what am i going to do? should i hold onto this house, should i sell it?
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i'm losing value every day. >> look at it two different terms. one is don't be swayed by the masses to say everybody else is walking away from their mortgage. what's the big deal? everybody will have a foreclosure, a late payment, a delinquency on their record. it will be easier in the long run because so many other people did it that way. it won't be because the credit scoring system is still going to be severely, you know, punitive and peoplizing you for doing that just to haphazardly walk away. >> don't do that. >> i don't encourage people to do that. seek every possible alternative, budgeting, credit counseling, a debt management program. >> right. >> to see if you can hang on to what could potentially be the biggest asset of your life. if you truly cannot afford a house, try to do a short sale, try to work out a plan where, you know, the minimal damage is done to your credit rating and your overall financial well-being. >> getting back to basics, this is your home. this is the place where you hang your hat. too many people have started to think of their home as an investment. if it starts to lose in value
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and you're going to be there for the next 30 years, hopefully you can take that home and pass it to your children's children and keep it in the family, so what if it loses value? hopefully you did it the right way and the responsible way. >> we got to go. we need an after-show now, right, like oprah. health care, open enrollment season has opened up. big changes are in store for you and your family and we'll break it down. with windows seven ♪ ♪ and a wireless router ♪ set up by geek squad? wow. three? ♪ when everyone can get online ♪ ♪ all at once, at the same time ♪ ♪ you won't have to fight ♪ ♪ you won't have to bite ♪ ♪ and you won't act like a bunch of animals ♪ [ male announcer ] get a desktop, laptop, and netbook with windows 7 networked together by geek squad. the best gifts come from best buy. with windows 7 networked together by geek squad. now your card comes with a way to plan for what matters to you.
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all right. quickly, guy, before we run out of time, one thing we have to be thankful for this time of year is our health, and while the health care debate is far from over, open enrollment season is pretty much done. let's take a quick listen to what our friend andrew rubin told us back in october about what's in store for next year. >> it's existed but it's changing. co-pays are going away in some plans and they're applying co-insurance amounts. it's very simple to understand. 10%, 20% of whatever the bill is, the individual's going to pay as opposed to $10, $20, $30 co-pays that used to apply. you're starting to see that
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more, not universal, but introduced in some places. >> our company is changing to co-insurance. >> we'll all be paying more for health insurance in to 20 10, but one good trend, those companies are offering free preventive care, so get that annual physical, that cholesterol screening. that will help you stay healthy and be in charge of your health care and stay healthy. >> the most important thing, right, lynette? >> absolutely. and 48 million americans uninsured, underinsured, look at what's offered by your state because if you're in a low to moderate income bracket, there may be health care options available for you or for your kids if you can't afford to pay for it yourself. >> like the s-chip program so, popular. >> exactly. >> i've been telling people to use up your benefits this year because it may not be as nice next year. what do you think? >> you're absolutely right, and we need to take advantage of health care savings accounts and flexible spending accounts and be mindful of how this is going
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to impact small businesses. >> the bottom line is we have to understand that physical prosperity is just as important as financial prosperity. are you working out four times a week, going to the dentist? dentist bills can add up. are you eating right? this is one of the fattest times of year for everybody. make sure you're working out and keeping glours shape. >> i love that. donna? >> and i guess i would just add onto that that you want to take advantage of that preventative care, and you can have a gym membership and put that into your flexible spending account. there are a lot of things you can write off to help yourself stay healthy. >> great idea. i will net, one last word for people out there who are thinking about what am i going to do about health care, they're worried about their families, you mentioned state programs, s-chip great for kids. if you're really against it, we don't have a job, there are free alternatives for people. >> absolutely. i think a lot of people need to get over the pride factor. sometimes people don't want to accept either government or state aid or free options that
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might be available to them. maybe they think they might be taxing the system in an unnecessary way, but listen, if your kids need it, you need it for your health, this is the time to say i'm eligible, i'm going to take advantage of it. don't be too proud to get the help you need. >> well, i appreciate all your comments today. you guys are so helpful. ryan, last word here for people out there who were thinking is next year going to be better. >> well, i always like to tell individuals that, you know, if you have the faith, you know, faith is half believing that tomorrow is going to be better and the other half is acting on that belief, because people act according to what they believe is going to happen. but you have to have the works, put it into works to make sure tomorrow will be a better tomorrow. >> excellent job. you guys were fantastic. thank you for spending part of your saturday with us.


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